Theresa May is set to announce her formal resignation today according to nearly all political commentators. The PM will retain her position until June 10th in order to host the visit from US President Donald Trump on June 3rd. Lees Meer

Following the latest failure of her withdrawal agreement, Theresa May’s premiership is over in any meaningful sense. The only question is when she will finally announce her resignation, and what tone the race to replace her takes? Lees Meer

In the afternoon of yesterday’s session, sterling stood still as political headlines came thick and fast with speculation rife that May would announce her retirement that evening amid significant pressure from senior party officials. Lees Meer

Yesterday, Theresa May pinned her hopes on increasing votes in favour of the Withdrawal Bill from Labour, as opposed to votes from within her own Tory party, ahead of the vote in 2-weeks’ time. Lees Meer

This morning it became clear President Trump has signed a waiver to postpone the sanctions against Chinese technology company Huawei for three months. The market reaction of this potential first step towards atonement is muted, however, as the measures are still to be implemented later. Lees Meer

Friday’s collapse of talks between Labour and May confirmed what markets had been progressively pricing in last week: that May’s final attempt at passing her withdrawal agreement in Parliament was likely to end in failure and resignation. The two key things to watch this week will be how the chances of May’s deal evolve, and the tone of the simmering battle to replace her. Lees Meer

Unless May manages to achieve some type of breakthrough in the near future, a likely Conservative Party revolt would see her ousted and replaced, possibly by a Eurosceptic such as Boris Johnson - a prospect that would likely see further sterling weakness due to the increased chances of a no-deal Brexit in October. Lees Meer

There seems to be no winner in current British politics, but there definitely is one loser - the pound. GBPUSD falls for the sixth consecutive trading day and now sits at levels not seen since mid-February. Lees Meer

This can be the synopsis of China’s largest sell-off of US treasury paper in two years in March, as it remains tiny compared to China’s total UST holdings, while even Canada sold more USTs that month. Lees Meer

News from Westminster that the Withdrawal Agreement will be put to a vote in the Commons at the beginning of June has brought the Brexit headache back for those investing in British assets. The game of picking the likeliest Brexit outcome has re-emerged, however, this time around market sentiment has deteriorated substantially. With the withdrawal […] Lees Meer

The recent response by the single currency is the complete opposite to that seen last year in April and May when a surge in global trade uncertainty had the euro quickly sink below the $1.20 level. This time it’s different for the euro, which suggests the currency may be close to a bottom on EURUSD. Lees Meer

Sterling continues to sit on the back foot as a G10 currency against the dollar in a mild risk-off environment. Now, Theresa May will hold out for cross-party talks to bear fruit in order to secure much needed Labour votes ahead of the WA’s fourth running. Lees Meer

This week brings new updates on the green shoots in the Eurozone, with the German ZEW Economic Sentiment on Tuesday and the vital First Gross Domestic Product reading for Germany on Wednesday. Lees Meer

Sterling has unwound all of last Friday’s Brexit optimism with the pound paring back 0.7% this week so far against the US dollar. On the face of it, the Brexit riddled coinage has fared relatively well compared to its G10 compatriots as trade tensions resurface. Lees Meer

The pound continues to trade in flux after Friday’s surge in Brexit optimism following a hammer blow for the Conservative party in local elections, whilst PM May is under revived pressure from the backbench 1922 committee. Lees Meer

GBP Optimism on a Brexit compromise led sterling to the top of the board on Friday, after a damning election result drove the Conservative and the Labour Party straight into each other’s arms. Theresa May continued to drop hints she may be willing to compromise on some form of customs union with the European bloc. […] Lees Meer

South African elections are set to take place on Wednesday 8th May, with the results expected within 48 hours of polls closing. That being said, most polling stations report results within 24 hours so the market reaction will likely occur on Friday. Lees Meer

Sterling stopped just short of 5 consecutive days trading in the green yesterday as the dollar reigned supreme and took the pound as one of many victims. Even an optimistic Bank of England failed to stem the pound's losses with Governor Carney painting an positive picture of growth and promised future rate hikes - once Brexit is wrapped up of course. Lees Meer

Green sprouts appearing through dark soil has become the narrative in FX markets this quarter as global headwinds begin to ease. However, after the strong correction in Q1, the same cannot be said for oil markets as the rally begins to peter out. Lees Meer

USD The lingering spirit of former Federal Reserve President Janet Yellen may have stirred current Fed chair Jerome Powell to use the words “transitory factors” when explaining the unexpected fall in core inflation since December. As this shows the confidence of the Fed that inflation will rebound coming months, which justifies a tighter monetary policy, […] Lees Meer

The dollar took a breather on Friday, having reached fresh 2019 highs against most major currencies and on indices such as DXY. Friday’s first-quarter GDP data came in well above expectations. Lees Meer

The dollar remained dominant yesterday, reaching a fresh 23 month high as measured by the DXY index. Yesterday’s data was firm, with Durable Goods rising a solid 0.4% and Unemployment Claims rising slightly to 230,000 for the week Lees Meer

The German Ifo business climate brought sobering news, as it signals that a German economic rebound in the rest of the year remains far from certain, while downside risks prove frustratingly persistent. Lees Meer

USD Together with JPY, USD topped the G10 currency board yesterday, which send the DXY dollar index to the highest point since June 2017. The move appeared to be led by flows into US equity and treasury markets, which also sent the S&P500 to new all-time highs while solid demand for a 2-year treasury auction […] Lees Meer

European markets reopen today with financial markets being rebooting by fresh liquidity. Yesterday saw the US dollar trade mixed against the G10 currencies, making the most ground against AUD and losing out to the Canadian dollar, with oil prices taking the market headlines. Lees Meer

The US and China trade negotiations continue to proceed with some goodwill towards the Trump administration showing from the Chinese camp. The US may be unwilling to lift tariffs on $50 billion worth of Chinese goods Lees Meer

The whole nation takes a sigh of relief as yet another no-deal exit is avoided and Parliament breaks up for over a week. Cross-party talks will continue in the background despite the MPs Easter holiday as the government tries to avoid an expensive, and potentially messy, European election. Lees Meer

Another 6-months is scheduled in the Brexit timetable with a review period in June. President Donald Tusk urges Brits to not waste this time in his speech last night while reiterating the Withdrawal Agreement was not up for renegotiation. Lees Meer

Factory Orders were negative yesterday for the fourth time in five months at -0.5%, showing the US industrial sector may not be immune to the woes that plague the Eurozone’s and China’s manufacturing sector. Lees Meer

This week the data calendar is focused around Wednesday’s release of February’s GDP and production data. The UK economy is widely expected to halt its month-on-month growth in February as suggested by the latest batch of PMIs due to Brexit uncertainty taking its toll. Lees Meer

The European Central Bank Meeting Accounts that came out yesterday were dovish as can be, yet, as expectations for the Eurozone economy are currently near all-time lows, it didn’t move the needle much on euro crosses. Lees Meer

Corbyn must proceed with caution as the consequences of his next action could be dramatic. Many political pundits have raised concerns over last night’s move by Theresa May as a precursor to a general election. Lees Meer

A strong positive surprise in China’s April manufacturing PMI yesterday morning set the tone for the session as investors appetite for risk rose once again. The rebound in the soft data saw China’s manufacturing sector expand for the first time this year, soothing fears over the global growth slowdown. Lees Meer

April fool’s day makes it difficult to filter reality and fiction in the media, especially when it comes to Brexit. But here’s what we know so far: April 12 is the new deadline, Parliament will have another series of indicative votes tonight and May will likely have another stab at getting her deal through this week. Lees Meer

What should have been Brexit day has now become a power play for May as she tries one last time to whip up some more Parliamentary fudge to help kick the can down the road. An EU deadline to pass a deal and trigger a further six-week extension to May 22 expires tonight. Lees Meer

Boris Johnson, Iain Duncan-Smith and Jacob Rees-Mogg all aired their support for the deal after May offered to step down should the UK leave with a deal in place at the next deadline. May’s job looks done as the beast that is Brexit takes another Prime Minister prematurely. Lees Meer

At around 19:00 GMT today, MPs will begin to vote on a series of indicative votes to break the Brexit impasse after lawmakers take control of the Commons business paper, with the results expected at around 21:00 GMT. Lees Meer

Fortnight. No, not the hit game millennials flocked to play. It is how long the EU leaders gave May to avoid a hard Brexit next Friday. It was decided last night after a horrendously long meeting that the EU would extend the Brexit deadline until April 12. Lees Meer

Another dovish turn by the Federal Reserve last night sent the dollar plummeting across the board with the broad DXY index falling 0.66%. The revised forward guidance measure showed 11 out of 17 Fed officials are not planning on raising rates at all in 2019, down from the market's assumption of one 25 basis point hike this year. Lees Meer

Sterling gears up for yet another pivotal Brexit week. The next 5 days determine whether we leave the EU with a deal in place in the next month or whether a longer delay to Article 50 will be imposed. Lees Meer

If a deal is pushed through next week in a third meaningful vote, May will request a short extension to A50 such that the legal framework of her deal can be finalised. This would undoubtedly be the best case for sterling now as it awaits the signal to push back towards fair value. Lees Meer

Investors will be weighing up the likelihood of a deal being struck as Parliament battles in the House of Commons and Brexit noise increases. The pound is likely to be highly volatile today as the Brexit headlines come thick and fast prior to tonight’s vote at around 19:30 GMT. Lees Meer

Now don’t hold your breath, but there is a slim possibility Brexit could be wrapped up in the next few days. But who are we kidding? Not the market it seems, which remains adamant that this week’s indicative votes will lead to a minor extension of roughly 2 months in Article 50. Lees Meer

Sterling continues to gear up for a volatile session next week without any significant data releases this week. Market participants’ attention is firmly on the three major events, the first of which, the meaningful vote, took another blow overnight as scepticism on forthcoming concessions from the EU hit the daily newspapers. Lees Meer

The single currency couldn’t match the level of play from the Ajax vs Real Madrid game and ended up in the bottom half of the G10 currency pack, despite hopeful signs from the domestic demand side of the Eurozone economy. Both January Retail Sales and the February Final Services Purchasing Manager Index outstripped the forecasts, lending some tentative support to the thesis that consumers and domestic demand may take the ailing Eurozone economy by the hand. Lees Meer

GBP Sterling pared back some of its recent gains yesterday, especially against the US dollar. Brexit will once again be back in focus today as Attorney General Geoffrey Cox will head to Brussels with Brexit Secretary du jour Stephen Barclay in a last ditch attempt to gain further concessions on the Irish backstop. Members of […] Lees Meer

Sterling starts the week on the front foot after Theresa May nips to the money tree that bought her a coalition government in an attempt to buy a Brexit deal. The £1.6bn “stronger towns” fund looks designed to swing Labour MP’s from Brexit support towns to vote for the current deal in next week’s second meaningful vote. Lees Meer

The GDP Price Index rebounded to a 1.7% quarterly, reversing the downward trend it had shown since the second quarter of the year. However, the real question may be whether this push will continue in the start of 2019, when the global slowdown and the longest-ever government shutdown might have filtered deeper into the economy. Meanwhile, the US dollar also received some support from Asian markets, where the stalled conversations between Donald Trump and North-Korean Kim Jong Un on denuclearisation, triggered some fears on Asian equities; a risk-off move that led to further haven flows into the dollar Lees Meer

Last night’s amendments saw May’s promises to host votes on a no-deal scenario and an extension in Article 50, should her second meaningful vote attempt fail, become legally binding. Meanwhile, Jeremy Corbyn announced Labour’s official stance to back a referendum should the meaningful vote fail. Lees Meer

Today, after Prime Ministerial questions at 12 p.m. the House of Commons vote on a whopping 12 backbench amendments, which include the original Cooper amendment that sought an extension in Article 50 and a fresh amendment by Spelman and Dromey which could give Parliament control a week after the meaningful vote deadline. This is what May tried to avoid, and with plenty of cross-party backing, could untangle much of May’s work yesterday. Lees Meer

This morning, sterling hit a fresh 4-week high after news broke that PM May will brief cabinet on an extension in Article 50 before addressing Parliament to outline the “progress” that has been made at mid-day. This could well see a vote in the House of Commons, should the next meaningful vote fail, to decide on an extension in Article 50 or a hard-Brexit scenario. Lees Meer

The degree to which Theresa May is running down the clock would definitely be worth a yellow card in football now she most likely needs to seek a 2-month extension. Although, for now, the only consequence is a higher trading pound sterling. GBP is currently taking this news positively as it would diminish the chance of the UK crashing out of the European Union on the 29th of March. Lees Meer

Sterling continues to float in anticipation of the next Brexit headline. With little changes thus far, Prime Minister Theresa May has until Wednesday to realistically strike concessions on the Irish backstop before facing a possible revolt in Parliament. Maintaining the topic of revolts, this morning Jeremy Corbyn was told to back a second referendum over May’s deal or face further defectors to The Independent Group. Lees Meer

Continued uncertainty over future interest rate hikes keeps being aired from Fed officials while balance sheet run-off looks set to end in 2019. Regardless, the market reaction seems fairly muted as investors have already had time to adjust their expectations towards further monetary policy accommodation. Lees Meer

Rumours of European Union concessions combined with building anticipation that the UK Parliament will take the necessary steps to prevent a hard Brexit from happening was enough to send sterling to multi-week highs against USD and EUR yesterday. Political editors of several UK newspapers postulated on Twitter yesterday that concessions of the EU on the Irish backstop order may be imminent, which could potentially make Theresa May’s Brexit deal palatable enough to cruise through Parliament at the next vote Lees Meer

Meanwhile, Honda announced it would shut down a major production facility in Swindon after Nissan declared earlier this month that Brexit uncertainty was one of the main reasons not to produce their next generation SUV in the UK. This is an indicator that some of the damage the Brexit uncertainty has done may not be easily reversed, which could limit the upside for a sterling rally in the case we eventually would see a Brexit deal. Lees Meer

On Friday, the euro dipped to a fresh three-month low against the dollar on the back of strong US manufacturing data and European Central Bank dovish tones. Governing Council member Francois Villeroy de Galhau scared markets by stressing the significance of the European slowdown while comments from ECB´s Benoit Coeure increased expectations of further quantitative easing, should the economic weakness in the Eurozone not prove as temporary as initially asserted. Lees Meer

A White House spokesperson announced that the US President will be signing the bipartisan agreement on immigration and border policies to avoid a second government shutdown on Friday, while also declaring a state of national emergency on the humanitarian crisis at the border. Such a move will allow Donald Trump to bypass Congress and secure more funds for the border wall than was previously allocated by the budget bill, setting the tones for further tensions in US politics. Lees Meer

Sterling fended off another negative data surprise yesterday after the Bank of England’s favoured inflation measure, the Consumer Price Index, fell below the 2% target for the first time in 48 months, but then conceded to a swathe of dollar strength in the afternoon. Lees Meer

GBP Sterling strengthened against USD like most of its peers yesterday, but was towards the bottom of the group of G10 currencies. No headline data was released, but Bank of England Governor Mark Carney gave a speech where he discussed the increasingly murky outlook for the global economy, which he concluded was likely to continue […] Lees Meer

GBP Yesterday, sterling lost some ground against the dollar on a day where some economist emitted a sigh of relieve as macro data once again dominated over Brexit headlines. Growth data showed the UK economy shrank in December by 0.4% on a monthly basis, pointing to a preliminary quarterly slowdown of 0.2% from 0.3% expected […] Lees Meer

Sterling gears up for another week of Brexit after broadly selling-off last week. The pound remains quite some distance from its 6-month high against the US dollar after weak Purchasing Managers Indices on Tuesday morning. The Bank of England’s net-hawkish meeting on Thursday proved insufficient in clawing back prior losses and the pound ultimately ended the week a percentage point lower against its American counterpart. Lees Meer

Sterling had a percentage point round trip yesterday with the Bank of England’s growth forecast causing much of the volatility. Headlines flashed across Bloomberg stating that the previous November estimate of growth in 2019, measured at 1.7%, was revised down in February’s release to 1.2% - this would be the lowest projected growth since the 2009 recession Lees Meer

The barrage of negative German Manufacturing data seems endless with yesterday’s Factory Orders showing a contraction of 1.6% in December and this morning’s Industrial Production showing a 0.4% decline in the same month. The euro took it personally and declined for the third day in a row against USD yesterday and continues to be under pressure again this morning. Lees Meer

GBP Sterling was among the worst performers in the G10 against the US Dollar yesterday, after weak Purchasing Managers’ Index data in the morning suggested the economy practically ground to a halt in January. Yesterday’s Services PMI came out at 50.1, barely above the 50 level that indicates overall output growth among the surveyed businesses. […] Lees Meer

GBP Yesterday’s Markit/ CIPS Construction Survey showed that the uncertainty over Brexit dampened the construction sector’s recovery. The total activity index dropped to its lowest level since the March snowstorms last year, and the builders’ outlook isn’t much better. The manufacturing/ construction industries decisions in light of Brexit uncertainty have captured many of the headlines […] Lees Meer

The single currency fought off a technical recession in Italy, downwardly revised growth forecasts from Germany, and the seemingly never-ending string of negative surprises in data last week to post a 0.43% gain against the dollar. Lees Meer

Yesterday the euro pared back some of the strength it had gained earlier, on the back of poor signs of economic performance released during the day. Preliminary GDP data indicates Italy had a 0.2% contraction in Q4, suggesting the country might have entered in a technical recession. Lees Meer

GBP As the dust settled after the Tuesday evening Brexit amendment’s, sterling settled in the middle of the G10 currency pack as markets digested its implications. The adopted Brady amendment basically sends Theresa May back to the European Union to fiddle for more concession on the Irish backstop option, although European Union President Jean-Claude Juncker […] Lees Meer

A new species has been discovered today in the Governing Council; the optimistic dove. European Central Bank President, Mario Draghi, once again displayed the variety of tones in his plume as he delivered a dovish message, but continuously guided the attention of the listener to the silver linings. Lees Meer

If May’s boisterous reception in the commons and tweets from Tory MPs are to be believed, May is more likely to survive tonight’s vote than not. This appears to be the market’s base case, with sterling rallying slightly this morning towards the 1.26 handle against USD despite the possibility of utter disaster in the event May loses and the UK heads for a no-deal outcome. Lees Meer

Following on from yesterday’s humiliating dodge, May now goes to Brussel’s to discuss going forward with Jean-Claude Juncker. Little has changed to our base case, despite the formal rejection of her draft Withdrawal Treaty not taking place. The $1.25 level has been realised, and May now goes to Brussel’s in an attempt to fudge contentious […]
The post UK investors continue to hedge in light of greater uncertainty appeared first on Monex Europe. Lees Meer

Sterling remains on hold in anticipation of next week’s vote. Yesterday, Chancellor of the Exchequer, Phillip Hammond, reiterated to Parliament that the proposed Brexit deal cannot be renegotiated and stood in line with May’s “my deal or no deal” stance. This was largely expected by markets and saw them shrug off the same comments heard from the government over the last few weeks. Lees Meer

Sterling continues to trade flat as the build-up to next week’s vote continues. Yesterday the government released the full legal advisory text from Attorney General Geoffrey Cox on the Brexit draft deal, with the main area of note that Northern Ireland would remain in the EU single market for goods and the EU customs regime, while Great Britain will be treated as a third country, should the backstop be enforced. Lees Meer